DTEK Energy decreases revenue 62%, EBITDA 75% in 1H20

Ukraine’s leading coal and power holding DTEK Energy
(DTEKUA) reported UAH 20.45 bln in net revenue for 1H20, according to its
abridged quarterly financials. Its revenue fell 62% yoy, which was a result of
declines in both volume of electricity sold (down 36% yoy to 10.1 TWh) and
realized price (down 29% yoy to UAH 1.24/kWh). Based on the provided results,
we estimate the company’s EBITDA decreased 75% yoy to UAH 2.78 bln. Its bottom
line decreased to negative UAH 16.52 bln in 1H20 (from positive UAH 3.34 bln a
year ago) on large ForEx, PP&E impairment and financial impairment losses.

DTEK Energy’s operating cash flow before working
capital changes decreased 77% yoy in 1H20 to UAH 2.59 bln. Its investments into
PP&E fell 57% yoy to UAH 1.21 bln. Its net debt increased 4% yoy to UAH
52.94 bln as of end-1H20, implying a net debt to LTM EBITDA ratio of about
9.6x, up from 2.1x  a year ago.

Alexander Paraschiy: DTEK
Energy’s cost cutting measures prevented its EBITDA from an even deeper decline
amid unfavorable market conditions, which is good news. The third quarter of
2020 should be slightly better for the company as both its output and achieved
prices are better qoq, thus far. However, it is very unlikely that the company
will be able to generate this year’s EBITDA of about UAH 8 bln, as the company
guided in July’s presentation to creditors. Most likely, its annual EBITDA will
be UAH 6.5 – 7.0 bln in 2020, unless any breakthrough changes happen on Ukraine’s
electricity market, in terms of recovery of demand or regulatory
environment.